Sorting through the information flood for usable knowledge for our farm

Wednesday, February 13, 2008

A recession for all...

I have sensed a touch of schadenfreude in a few grain farmers as prosperity rains down in the form of record prices. Much of the country teeters on the brink of harder times and, well,... we aren't.

But they probably had it coming. At any rate, the slowdown is not being shared equally.

In Florida, Nevada and Arizona the story is similar: plunging house prices, rising foreclosures and disproportionate increases in unemployment. Not all is gloomy: in these states, as in the rest of America, strong global growth and the weak dollar have buoyed export industries and boosted tourism. (Orlando International Airport, the gateway to Disney World, saw a record number of passengers last year.) But these positives have failed to counter the drag from housing and weaker consumer spending. Mark Zandi, chief economist at Moody's Economy.com, reckons that all four bubble states, along with Michigan, are already in recession. Together, he points out, they make up 25% of America's GDP.

Move inland from the coasts and away from the industrial Midwest, however, and the picture, for now, looks less grim. A belt running from Texas north-west across the Great Plains and the Rocky Mountains has been doing particularly well, thanks to soaring exports and high commodity prices. Ethanol subsidies and “agflation” have brought a bonanza to the farm states. Agricultural exports are up almost 20% compared with 2006, while farm incomes are growing smartly. Extractive industries are booming. Miners find it worthwhile to dig for copper in Butte, Montana, even though the operators say it is the worst-grade ore in the world. These states now have some of the lowest unemployment rates in the country. With far less of a housing boom, they have also avoided the worst of the subprime bust.

For politicians from Butte to Topeka, the question now is whether this good fortune will continue. Regional disparities, both in good times and bad, are no surprise in a vast continental economy. During the 1991 recession California and New England suffered disproportionately, thanks to banking crises and defence cutbacks. The 2001 downturn hit states with high-tech hubs hardest at first, while its hangover lasted longest in the industrial Midwest. This time a lot depends on the rest of the world. If emerging economies remain resistant to an American recession and commodity prices stay strong, America's exporting regions will benefit. [More]

Even though it was a mirage, farmers are no longer estranged from the rest of the economy. And economic pain will filter down to us. The most profound connection won't be from GDP either.

Virtually all producers now have family and a majority of their friends outside agriculture. Our children are feeling the squeeze, our brother worries about his job, our golfing buddy just lost his health insurance - the ties are personal, not just financial.

So while we can feel the bullet whistle by, it is likely striking closer to the heart than we think.

Speaking

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About Me

I am a sixth-generation farmer who hold a degree in Chemical Engineering, a minor in Economics, and served as a nuclear engineer from 1970-75.
Jan, Aaron and I farm 2100 acres near Chrisman, IL. Aaron joined our farm operation in 2008.
I have written humor and commentary for Farm Journal and Top Producer for 20 years. I was the host of US Farm Report from 2005 to 2014, and now serve as Commentator.
I speak often to farm and agribusiness groups on topics from risk analysis to professional development.

About Incoming

Incoming is a collection of current thoughts on the nature of the profession of farming from the perspective of a farmer/writer (see full bio here).

It will soon become obvious to readers I lean to the middle, specifically toward pragmatic libertarianism: preserving individual liberty and responsibility. Another strong influence is my education as an engineer. Now throw in 45 years as a husband, 41 as father, and 30 as a choir director. Not to mention a life of farming.

As for the humor... what can I say? Stuff just strikes me as funny. A lot of stuff, actually.

The Internet has filled a hole in my life I never knew existed. These posts are brief summaries of what I am finding and how I feel it will affect my (our) world.

The opinions are my very own. It was not easy to think them up, and nobody else can be blamed for them. In fact, most people around me brace themselves when I start typing or open my mouth.

I welcome comments. I am exceptionally difficult to offend, and have learned to try to rectify mistakes or errors in judgment as rapidly as possible. And I have had plenty of practice.

Thank you for reading.

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